Southwest-based Premier Financial Planning undertakes due diligence on its outsourcing partners every year. It added discretionary fund manager (DFM) Casterbridge Wealth, a relative newcomer to the market, to its panel at its last review four months ago.
Around 10% of Richard Odell’s clients currently use its discretionary portfolio service, utilising its fully bespoke, personalised portfolios.
A director and founding member of Premier, Odell met Keith Edwards, chief executive and chief investment officer of Casterbridge when Edwards ran discretionary portfolios for Quilter Cheviot. Edwards was a founding director of Casterbridge. The company opened for business in December 2016.
Quilter remains on the adviser’s panel alongside Investec. But Odell, who works from Premier’s Shaftesbury office, said: ‘We have a long-standing relationship with Keith. He really understands client objectives and translates that information into effective client solutions. Adding a smaller firm, that can sometimes be more agile than the nationals, was a nice addition to our suite of solutions.’
Odell believes Casterbridge’s size is better suited to clients who like the personal touch and want to meet regularly with Edwards. Others are better served by bigger players with their slightly lower costs.
‘Both Investec and Quilter have fantastic service and support, along with all the benefits you would expect from a national DFM,’ said Odell. ‘The slightly more boutique approach from Casterbridge better fits with some clients.’
So far, he is ‘very pleased’ with Casterbridge’s performance. Most of its business is managed to a balanced, balanced income, cautious or cautious income mandate, as it seeks to fill a gap in the market for people looking to live off their retirement savings. These portfolios have returned between 2.5% and 4% in the past six months.
‘We continue to monitor performance closely,’ said Odell. ‘We are aware this is a new company experiencing rapid growth, which is likely to test its operational organisation.’
Typically, Premier considers DFM solutions for clients with £200,000 or more to invest, who stand to benefit from a full discretionary service. ‘We don’t use any model portfolios provided by our panel of DFMs. In our experience, a good DFM can deliver benefits over and above a model portfolio for clients in both the accumulation and decumulation phase,’ said Odell.
‘These clients often have a portfolio with an investment bias towards specific timescales and goals that a model cannot achieve. Using clients’ capital gains tax and other unused allowances can also be beneficial.
‘The adviser should really understand and engage with the client, then effectively communicate this to the DFM,’ he said. ‘In this way, the investment can become a “working document” and truly tailored to that client.’
Premier outsources provision of model solutions to Close Brothers, SEI and True Potential. Premier uses the True Potential wrap; the DFM solutions do not sit on the wrap. It also uses the True Potential back-office system and is hopeful Casterbridge will feed directly into this in time.
POINT OF VIEW
Casterbridge offers ‘exceptional service, translating to a great customer experience,’ said Odell.
Investment manager Keith Edwards proactively gets to know individual clients and engages with them as often as they want.
Casterbridge takes a flexible approach to investment management and shows a ‘real desire’ to create fully bespoke, personalised portfolios.
This is ‘very marginally higher’ than the other DFMs on the adviser’s panel. Casterbridge typically charges 0.9% per year for its discretionary service, compared to 0.8% for both Quilter and Investec.
Casterbridge has been running bespoke portfolios for less than a year, so has limited past performance figures.
The adviser can get swamped with too much detail. ‘Keith can get a bit animated when talking about asset allocations and macroeconomics.’
Average portfolio size of the adviser’s clients: £600,000
Minimum investment limit for clients using the service: £200,000
Number of clients using the service: 6